Pushing for uniformity
in disclosures, Securities and Exchange Board (SEBI) has asked mutual fund
companies to prominently disclose on a daily basis the total expenses charged
to customers for all schemes under a separate head on their websites.

The markets regulator
also asked them to communicate to investors any change in the base Total
Expense Ratio (TER) of the scheme through email or SMS at least three (3)
working days prior to effecting such change.

The TER is a percentage
of a scheme’s corpus that a mutual fund house charges towards expenses
including administrative and management.

The move comes after
Sebi observed that there are frequent changes carried out in total expense
ratio and such changes are not prominently disclosed to investors.

“AMCs (Asset Management
Companies) shall prominently disclose on a daily basis, the TER of all schemes
under a separate head - Total Expense Ratio of Mutual Fund Schemes’ on their
website in downloadable spreadsheet format,” SEBI said in a circular.

This move is part of the
effort by the SEBI to bring uniformity in disclosure of actual TER charged to
mutual fund schemes and to enable the investor to take informed decision.

The new directives would
be applicable from March 1, 2018

However, any decrease in
TER on account of lower applicable limits due to increase in daily net assets
of the scheme would not require issuance of any prior notice to the investors.
Such drop should however be immediately informed to investors through email or
SMS.

Change in the base TER
charged to the scheme shall be intimated to the board of directors of AMC along
with the rationale recorded in writing.

The changes in TER need
to be placed before the Trustees on quarterly basis along with rationale for
such changes.

Last week, the regulator SEBI had allowed mutual fund houses to charge additional TER of up to 0.30% from
beyond top 30 cities, as against 0.15% earlier.